What changed in this filing

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Item 1. Business

2024-02-26 compared with 2023-02-27 · 129 added, 123 removed, 313 unchanged (45% of the section changed)

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The Progressive Corporation, an insurance holding company, has insurance and non-insurance subsidiaries and affiliates (references in this Item to subsidiaries includes affiliates as well).

Our insurance subsidiaries provide personal and commercial auto insurance, personal residential and commercial property insurance, workers’ compensation insurance primarily for the transportation industry, business-related general liability insurance, and other specialty property-casualty insurance and related services.

Our insurance subsidiaries write personal and commercial auto insurance, personal residential property insurance, business-related general liability and commercial property insurance predominantly for small businesses, workers’ compensation insurance primarily for the transportation industry, and other specialty property-casualty insurance and provide related services.

Our non-insurance subsidiaries generally support our insurance and investment operations.

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Description of Business

Our executive group oversees the business and corporate functions that support all areas of our organization and consists of the following:

Chief Executive Officer

The management team that oversees the business and corporate functions that support all areas of our organization consists of the following:

Chief Executive Officer (CEO)

• Chief Financial Officer

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• Personal auto insurance represented approximately 94% of our total Personal Lines net premiums written in 2023, 2022, and 2021.

We ranked third in market share in the U.S.

private passenger auto market based on 2021 premiums written.

We believe that our market share grew in 2022, however, industry data regarding our ranking for 2022 is not yet available.

We ranked second in market share in the U.S.

private passenger auto insurance market, based on 2022 premiums written, and we believe we continue to hold that position for 2023.

There are approximately 250 competitors in this market.

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The Agency business also writes insurance through strategic alliance business relationships with other insurance companies, financial institutions, and national agencies.

The total net premiums written through the Agency channel represented 47% of our Personal Lines volume in 2022, and 48% in both 2021 and 2020.

The total net premiums written through the Agency channel represented 46% of our Personal Lines volume in 2023, 47% in 2022, and 48% in 2021.

• The Direct business includes business written directly by us on the Internet, through the Progressive mobile app, and over the phone.

The total net premiums written by the Direct business represented 53% of our Personal Lines volume in 2022, and 52% in both 2021 and 2020.

Our Personal Lines strategy is to be a competitively priced provider of a broad range of personal auto and special lines insurance products with distinctive service, distributed through whichever channel the customer prefers, and combined with property insurance and other products when appropriate to match our customers’ needs.

The total net premiums written by the Direct business represented 54% of our Personal Lines volume in 2023, 53% in 2022, and 52% in 2021.

Our Personal Lines strategy is to be a competitively priced provider of a broad range of personal auto and special lines insurance products with distinctive service, distributed through whichever channel the customer prefers, and bundled with property insurance and other products when appropriate to match our customers’ needs.

Volume potential is driven by our price competitiveness, the actions of our competitors, brand recognition, and quality service delivered through our dedicated employees who embody the Progressive culture, among other factors.

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We seek to refine our personal auto segmentation, underwriting models, and pricing over time, and we regularly elevate new product models.

At any one time, we could have multiple product models in the marketplace as new versions are being rolled out from state to state.

At any one time, we could have multiple product models in the marketplace, as new versions are rolled out on a state-by-state basis.

Such new product models generally introduce new risk variables intended to improve its accuracy of matching rate to risk, increase our competitiveness, or make our products more attractive to specific market segments, among other enhancements.

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We offer Snapshot through our hardware-based and/or mobile-app versions in all states, other than California.

This mobile app is intended to improve the user experience while also reducing our monitoring costs.

In addition to the personal benefits for our customers, the data collected via the mobile app affords us a unique perspective on mobile device usage, vehicle operations, and accidents.

We believe this mobile app improves the user experience.

In addition to the personal benefits for our customers, the data collected via the mobile app affords us a unique perspective on vehicle operations, accidents, and mobile device usage.

Our updated auto product models, discussed above, often also include Snapshot enhancements intended to improve its accuracy and competitiveness and broaden its applicability.

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To further drive bundling in the Agency channel, we offer the Platinum program to those select agents who have the appropriate customers for our bundled offering.

This program combines our auto and home insurance with the compensation, coordinated policy periods, single event deductible, and other features that meet the needs and desires that our agents have expressed.

As of December 31, 2022, we had just over 4,000 Platinum agents.

This program combines our auto and Property insurance with the compensation, coordinated policy periods, single event deductible, and other features that meet the needs and desires that our agents have expressed.

As of December 31, 2023, we had nearly 7,500 Platinum agents.

• We offer independent agents an agency quoting system that makes it easier for them to bundle multiple policies with us.

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Portfolio is available for all agents appointed to write new business where we offer Property products.

• In the Direct channel, we bundle Progressive auto with Property products in almost all states, as well as with homeowners and renters products provided by unaffiliated insurance carriers nationwide.

• In the Direct channel, we bundle Progressive personal auto with our Property products in almost all states, as well as with homeowners and renters products provided by unaffiliated insurance carriers nationwide.

We offer these bundles by providing a single destination to which consumers may come for both their auto and property insurance needs.

In many cases, we may offer discounts to incentivize or reward this bundling.

• Where available, our special lines products and umbrella insurance can be combined with any of the auto, home, or renters coverages that we offer, in either the Direct or Agency channel.

• Where available, our special lines products and umbrella insurance can be combined with any of the personal auto, home, or renters coverages that we offer, in either the Direct or Agency channel.

• HomeQuote Explorer ® (HQX) is our multi-carrier, direct-to-consumers online property offering.

Through HQX, consumers are able to quickly and easily quote and compare homeowners insurance online from Progressive and other carriers.

During 2022, we continued to expand the availability of the online buy button, which was active in all states where we write Property products via HQX by the end of 2022.

Through HQX, consumers are able to quickly and easily quote and compare homeowners insurance online from Progressive and other carriers, with the HQX online buy button available in almost every state.

• As we increase our penetration of the more complex, multi-product customers who are critical to our Destination Era success, we are further expanding the roster of products provided by unaffiliated companies that we make available through online and telephonic referrals and for which we receive commissions, or other compensation, that are reported as service revenues.

Our list of unaffiliated company products includes items such as classic and specialty car, pet, health, life, electronics, travel, and event insurance.

Our list of unaffiliated company products includes items such as pet health, life, and classic and specialty car insurance.

Commercial Lines

The Commercial Lines segment writes auto-related liability and physical damage insurance, business-related general liability and property insurance predominately for small businesses, and workers’ compensation insurance primarily for the transportation industry.

We expanded our portfolio of offerings to larger fleet, workers’ compensation coverage for trucking, along with trucking industry independent contractors, and affinity programs in 2021, when we acquired Protective Insurance Corporation and subsidiaries (Protective Insurance).

The Commercial Lines business accounted for 16% of our total net premiums written in 2023, 18% in 2022, and 17% in 2021.

In 2021, we acquired Protective Insurance Corporation and subsidiaries (Protective Insurance) to expand our portfolio of offerings to larger fleet, workers’ compensation coverage for trucking, along with trucking industry independent contractors, and affinity programs.

Unless otherwise noted, the following discussion excludes transportation network company (TNC) business, which is discussed below.

We offer our auto products in all states.

Our commercial auto customers insure approximately two vehicles per policy.

Unless otherwise noted, the following auto discussion focuses on our commercial auto business and, therefore, excludes business owners’ policy (BOP) and workers’ compensation products, which are discussed below.

We offer our commercial auto products in all states.

Our commercial auto customers insure approximately two vehicles per policy, excluding large fleet policies.

During 2023, we wrote about 90% of our commercial auto business through the agency channel.

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Progressive and these leading commercial auto insurers comprise 85% of this market.

Our Commercial Lines business ranked number one in the commercial auto insurance market for 2021 based on premiums written, and we believe that we continued to hold that position for 2022.

The Commercial Lines business operates in the following commercial auto business market targets:

Progressive ranked number one in the U.S.

commercial auto insurance market based on 2022 premiums written.

We have been the number one commercial auto insurer since 2015, and we believe that we continued to hold that position for 2023.

The Commercial Lines business operates in the following commercial auto business market targets (BMT):

• Business auto – autos, vans, pick-up trucks used by small businesses (e.g., retailing, manufacturing, farming) and for-hire livery (e.g., non-fleet (i.e., five or fewer vehicles) taxis, black-car services, and airport taxis),

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New models are typically rolled out on a state-by-state basis and, as a result, we often have more than one product version in the marketplace at a time.

Similar to Snapshot in the personal auto business, the Commercial Lines business offers its customers UBI options.

Similar to Snapshot in the personal auto business, the Commercial Lines business offers its commercial auto customers UBI options.

Smart Haul ® is the UBI program that uses driving data from a motor carrier’s existing electronic logging device.

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Both programs are available in almost all states.

In addition, we provide commercial auto coverage in the TNC business to Uber Technologies subsidiaries in 13 states and to Lyft’s rideshare operations in 4 states.

TNC represented about 10% of our Commercial Lines net premiums written in 2022, 6%

in 2021, and 4% in 2020.

In addition to the BMTs listed above, as of December 31, 2023, we provided commercial auto coverage in the transportation network company (TNC) business to Uber Technologies subsidiaries in 16 states and to Lyft’s rideshare operations in 4 states.

TNC represented about 13% of our Commercial Lines net premiums written in 2023, 10% in 2022, and 6% in 2021.

Premiums written in our TNC business are determined in part by estimating the number of miles to be driven over the life of the policy term, on a policy-by-policy basis.

These premium estimates are adjusted monthly based both on actual miles driven and an estimate of miles to be driven during the remaining policy term.

During 2022, in addition to increasing rates to address profitability, our TNC business experienced a strong increase in rideshare miles traveled compared to 2021.

We also offer business-related general liability and property insurance through our business owners policy (BOP) insurance.

These products are geared specifically to small businesses and are currently available to agents in a majority of states, excluding the District of Columbia, with plans to expand to additional states during 2023.

During 2023, our TNC business experienced a strong increase in rideshare miles traveled compared to 2022.

Our Commercial Lines business also offers business-related general liability and property insurance through our BOP insurance.

These products are geared specifically to small businesses and at year-end 2023 were available to agents in 44 states, excluding the District of Columbia, with plans to expand to additional states during 2024.

We also offer workers’ compensation insurance tailored for the transportation industry.

Our offering includes loss prevention services that promote safe operations and dedicated claims-handling specialists.

This product is available through a limited network of licensed brokers and includes options ranging from guaranteed premium cost plans to loss dependent plans, to meet the varying needs of small to large trucking fleets.

We also continue to act as an agent for business customers to place BOP, general liability, professional liability, and workers’ compensation coverage through unaffiliated insurance carriers and are compensated through commissions, which are reported as service revenues.

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Our Property segment writes residential property and renters insurance in virtually all states, primarily in the independent agency channel and through select agents under our Platinum program discussed above.

We also act as a participant in the “Write Your Own” program for the National Flood Insurance Program under which we write flood insurance in virtually all states;

100% of this business is reinsured.

We also act as a participant in the “Write Your Own” program for the National Flood Insurance Program (NFIP) under which we write flood insurance in virtually all states;

100% of this business is reinsured with the NFIP.

Our Property business accounted for 5% of our total net premiums written in 2023, 2022, and 2021.

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See the “Reinsurance” section below for further discussion of our reinsurance programs.

As one of the 15 largest homeowners carriers in the U.S.

based on 2021 premiums written, we specialize in residential property insurance for homeowners, other property owners, and renters, as well as insurance for manufactured homes, personal umbrella insurance, and primary and excess flood insurance.

We specialize in residential property insurance for homeowners, other property owners, and renters, as well as insurance for manufactured homes, personal umbrella insurance, and primary and excess flood insurance.

We were the tenth largest homeowners carrier in the U.S., based on 2022 premiums written, and we estimate that we retained this ranking for 2023.

There are approximately 365 competitors in the homeowners insurance market nationwide and we compete with many of these companies.

Progressive and the other leading 25 large companies/groups, each with over $800 million of premiums written annually, comprise 77% of the market.

Progressive and the other leading 27 large companies/groups, each with over $800 million of premiums written annually, comprise about 80% of the market.

As discussed above, our Property business is an important component of our Destination Era strategy.

Our reinsurance activity includes both transactions which are regulated and those that are non-regulated (e.g., voluntary).

The regulated programs include several mandatory state pools, such as the Michigan Catastrophic Claims Association, Florida Hurricane Catastrophe Fund, and North Carolina Reinsurance Facility, as well as other reinsurance facilities required by specific states for various lines of business.

We are also a participant in the “Write Your Own” program for federally regulated plans for flood (National Flood Insurance Program).

In 2022, our service contract to act as a servicing agent for Commercial Automobile Insurance Procedures/Plans (CAIP) expired and we did not renew the contract.

The CAIP business will be in runoff for a year from its expiration.

In addition, we have elected to participate in the Florida Reinsurance to Assist Policyholders Program for 2023.

Our reinsurance activity includes both transactions which are regulated and those that are non-regulated.

The regulated programs include several mandatory state pools, such as the Michigan Catastrophic Claims Association, Florida Hurricane Catastrophe Fund (FHCF), and North Carolina Reinsurance Facility, as well as the NFIP and other reinsurance facilities required by specific states for various lines of business.

In addition, we participated in the Florida Reinsurance to Assist Policyholders Program (RAP) for 2023.

All of these programs are governed by the individual state’s insurance regulations.

Our non-regulated arrangements reinsure activities in our Property business and our Commercial Lines business.

Our non-regulated transactions represent voluntary external reinsurance arrangements related to portions of our Property and Commercial Lines businesses;

we do not reinsure our Personal Lines business outside of the regulated programs discussed above.

Property Programs

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We also maintain an excess of loss reinsurance treaty covering our personal umbrella business.

The occurrence excess of loss program supports the goal of maintaining adequate capital and is comprised of privately placed reinsurance, reinsurance placed through catastrophe bond transactions, and coverage obtained through the Florida Hurricane Catastrophe Fund.

Under the 2023 occurrence excess of loss reinsurance, we are responsible for the first $200 million of losses and allocated loss adjustment expenses (ALAE) for the first event.

We may be responsible for additional losses if we experience more than two such events or if claims incurred exceed the maximum coverage limits of the reinsurance that is then in place.

The coverage limits, net of retention, currently in place are:

The coverage limits, net of retention, in place at December 31, 2023, were as follows:

• $2.4 billion for a first event in Florida;

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Reinstatement premiums would have no effect on our results of operations since, per our contracts, we have separate reinsurance to cover these situations.

During 2022, we retained $200 million, and ceded $800 million, of losses and ALAE under the occurrence excess of loss reinsurance program, all related to Hurricane Ian.

During 2023, no losses were ceded under the occurrence excess of loss program related to storms occurring in 2023.

In February 2024, a catastrophe bond matured, overall reducing our maximum coverage limits by $200 million, irrespective of the location of the first event.

In addition, from June 1, 2023, through December 31, 2023, we had shared limit coverage in our reinsurance program that provided $125 million of coverage for named storms (hurricanes and tropical storms as designated by the U.S.

National Weather Service).

This reinsurance arrangement can, depending on the circumstances, provide additional coverage for a significant covered event, or provide coverage for aggregate losses under our occurrence retention.

This reinsurance arrangement can, depending on the circumstances, provide additional coverage for a significant covered event, or provide coverage for aggregate losses under our occurrence excess of loss retention.

During 2023, we ceded no losses under this “hurricane season” coverage.

We have renewed this coverage from June 1, 2024, through December 31, 2024 (i.e., the 2024 hurricane season) for $175 million of coverage.

During 2022, our Property business also had an aggregate excess of loss program structure, which provided a maximum amount of $175 million of coverage for non-named storms, and in certain cases for named storms, in multiple layers with varying retention thresholds starting at $575 million in the aggregate.

Each layer in the aggregate excess of loss program was subject to a per occurrence $2 million deductible before each loss could be considered for aggregate retention, and each event was subject to a $98 million coverage limit.

During 2022, no losses were ceded under this aggregate excess of loss agreement related to 2022 accident year storms.

In January 2023, the Property business entered into a new aggregate excess of loss program for the 2023 accident year, with the multiple layers providing for a total coverage amount of $185 million for catastrophe event losses and ALAE.

During 2023, our Property business also had an aggregate excess of loss program structure, with the first retention layer threshold ranging from $500 million to $575 million, excluding named tropical storms and hurricanes, and the second retention layer threshold of $600 million, including named tropical storms.

The first and second layers provide coverage up to $100 million and $85 million, respectively.

During 2023, we exceeded the first layer annual retention threshold by $17.9 million, under this program.

Each layer in the 2023 aggregate excess of loss program was subject to a per occurrence deductible ranging from $2 million to $5 million before each loss could be considered for aggregate retention, and each event was subject to a coverage limit ranging from $95 million to $98 million.

In addition, any one portion of the aggregate program does not have to be exhausted before the other portions can be applied.

In January 2024, the Property business entered into a new aggregate excess of loss program for claims occurring in 2024, with the multiple layers providing for a total coverage amount of $185 million for catastrophe event losses and ALAE.

The layers provide coverage, as follows:

• The first layer has retention thresholds ranging from $500 million to $575 million, and provides a total of $100 million of coverage.

This layer does not provide coverage for named tropical storms or hurricanes, as designated by the U.S.

Coverage Terms (millions) First Layer Second Layer

Retention $450.0 to $475.0 $525.0

Total coverage, net of retention $85.0 $100.0

Per occurrence deductible before each loss could be considered for aggregation, dependent on the peril covered $5.0 or $7.5 $20.0 or $25.0

Per event coverage limit, net of the per occurrence deductible, dependent on the peril covered $42.5 or $45.0 $175.0 or $180.0

The first layer of coverage does not provide coverage for named tropical storms or hurricanes, as designated by the U.S.

National Weather Service.

• The second layer has a retention threshold of $600 million and provides a total of $100 million of coverage, with Progressive retaining a 15% portion of coverage available under this layer.

This layer includes coverage for named tropical storms or hurricanes as designated by the U.S.

The second layer includes coverage for named tropical storms or hurricanes as designated by the U.S.

National Weather Service, and also includes a secondary coverage part with a retention threshold of $425 million that shares the same $100 million limit mentioned above.

The secondary coverage portion only provides coverage for named tropical storms or hurricanes, as designated by the U.S.

National Weather Service.

Each aggregate layer is subject to a per occurrence deductible ranging from $2 million to $5 million before each loss could be considered for aggregate retention, and each event is subject to a coverage cap ranging from $95 to $98 million.

In addition, any one portion of the aggregate program does not have to be exhausted before the other portions can be applied.

Any one portion of the aggregate program does not have to be exhausted before the other portions can be applied.

Commercial Lines Programs

The reinsurance program in our Commercial Lines business is designed to help manage certain exposures in our commercial auto, TNC, BOP, and workers’ compensation products.

Our Commercial Lines business uses quota-share reinsurance agreements for TNC, and certain workers’ compensation and BOP coverages.

Our Commercial Lines business uses quota-share reinsurance agreements for TNC, and certain workers’ compensation and BOP product coverages.

Under each agreement, we cede a portion of premiums, losses, and, in most cases, loss adjustment expenses (LAE).

As part of the Commercial Lines program, we also have excess of loss reinsurance agreements for higher-limit commercial auto liability, and certain BOP and workers’ compensation coverages, which reinsures a portion of loss above a retention threshold.

The retention threshold for the BOP and Progressive high-limits auto liability excess of loss agreements is $1 million, for each casualty occurrence or each property loss.

For the Protective Insurance large fleet commercial auto business, we retain the first $2 million, per occurrence, and have coverage excess of $2 million up to $5 million.

Under the current program, in certain scenarios, our retention could be reduced to $1 million, depending on the accumulation of losses in excess of $1 million.

In addition, for the workers’ compensation product, we have catastrophe workers’ compensation coverage up to $75 million per occurrence pursuant to a $20 million maximum any one life sublimit.

As part of the Commercial Lines program, we also have excess of loss reinsurance agreements for higher-limit commercial auto liability, and certain BOP and workers’ compensation product coverages, which reinsure a portion of loss above a retention threshold.

The retention threshold for the BOP excess of loss agreement is $2 million, while the retention threshold for the uninsured and underinsured motorist (UM/UIM) commercial auto liability excess of loss agreement is $5 million, for each

casualty occurrence or each property loss.

For the large fleet commercial auto business, we retain the first $2 million, per occurrence, and have a coverage limit, net of retention, of up to $3 million.

In addition, for the workers’ compensation product, we have catastrophe workers’ compensation coverage up to $74 million per occurrence pursuant to a $20 million maximum one-life sublimit.

In general, we retain approximately $1.3 million per occurrence on workers’ compensation through the use of excess of loss and quota-share reinsurance.

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Reinsurance recoverables under this arrangement are required by our contracts to be collateralized (i.e., secured by assets held by an independent third party or a letter of credit issued by a commercial bank) at a target of over 100% of the recoverable balance.

During 2022, the remaining portion of reinsurance for the TNC product was written by a panel of third-party reinsurers.

During 2023, the remaining portion of reinsurance for the TNC product was written by a third-party reinsurer.

Program Evaluation

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Insurance Risks and – VI.

Credit and Other Financial Risks below and Note 7 – Reinsurance in our Annual Report for more information.

Credit and Other Financial Risks below and Note 7 – Reinsurance in our 2023 Annual Report to Shareholders, which is filed as Exhibit 13 to this Form 10-K (the Annual Report) for more information.

Our employees handle nearly all of our Personal and Commercial Lines claims from either physical claims offices throughout the United States or through a virtual environment, and are supported by centralized functions at our corporate offices and a nationwide network of nearly 3,600 third-party repair shops.

During 2022, we used independent claim adjusters opportunistically in our vehicle businesses to help support our claim employees manage claims inventory, and to timely respond to our customers impacted by Hurricane Ian.

We do not intend to use independent adjusters as an ongoing significant part of our claims handling model.

For our Property business, we manage claims through a network of independent claim field adjusters and internal claim representatives managing the overall claims process.

During 2023, we used independent claim adjusters opportunistically in our vehicle businesses to help support our claim employees manage claims inventory and to timely respond to our customers impacted by certain catastrophe events.

While not intended to be a significant part of our claims handling model for these businesses, we may use independent adjusters from time to time.

For our Property business, we manage claims through a network of independent claim field adjusters and employee claim representatives that manage the overall claims process.

As of December 31, 2023, we had about 1,100 claim employees to handle our Property claims;

we plan to continue to increase our internal claims staff in 2023.

we currently plan to continue to increase our internal claims staff in 2024.

Competitive Factors

The insurance markets in which we operate are highly competitive.

Property-casualty insurers generally compete on the basis of price, agent commission rates, consumer recognition and confidence, coverages offered and other product features, claims handling, financial stability, customer service, and geographic coverage.

Property-casualty insurers generally compete on the basis of price, agent commission rates, consumer brand recognition and confidence, coverages offered and other product features, claims handling, financial stability, customer service, and geographic coverage.

Vigorous competition is provided by large, well-capitalized national companies in both the agency and direct channels, and by smaller regional insurers.

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An insurer’s ability to adapt to change, innovate, develop, and implement new applications and other technologies can affect its competitive position.

In addition, our competitive position could be adversely impacted if we sustain security breaches or other “cyber attacks” on our systems or are unable to maintain uninterrupted access to our systems, business functions, and the systems of certain third-party providers.

See Item 1A, Risk Factors below for more information.

In addition, our competitive position could be adversely impacted if we, or one of our third-party vendors, experience a cybersecurity attack or incident or we are unable to maintain uninterrupted access to our systems, business functions, and the systems of certain third-party providers.

See Item 1A, Risk Factors and Item 1C, Cybersecurity below for more information.

In addition, there has been a proliferation of patents related to new ways in which technologies can affect competitive positions in the insurance industry.

Several of our competitors have many more patents than we do.

Some of the patents we currently hold include a usage-based insurance patent (expiring in 2024 or after), two patents on the Name Your Price ® functionality on our website (expiring in 2028 or after), three multi-product quoting patents (expiring in 2032 or after), three patents for our implementation of a mobile insurance platform and architecture (expiring in 2032 or after), a patent on our system of providing customized insurance quotes based on a user’s price and/or coverage preferences (expiring in 2033 or after), two patents for our loyalty call routing system (expiring in 2033 or after), a patent for a multivariate predictive system that processes usage-based data (expiring in 2035 or after), three patents for the implementation of chatbots in online quoting and servicing (expiring in 2038 or after), two patents for our Commercial Lines business classification system (expiring in 2039 or after), and two patents for our automated document classification system (expiring 2040 or after).

We have a substantial amount of “know-how” developed from years of experience with usage-based insurance, and from analyzing the data from over 48 billion driving miles derived from our usage-based devices and our mobile app.

Some of the patents we currently hold include a usage-based insurance patent (expiring in 2024 or after), two patents on the Name Your Price ® functionality on our website (expiring in 2028 or after), three multi-product quoting patents (expiring in 2032 or after), three patents for our implementation of a mobile insurance platform and architecture (expiring in 2032 or after), a patent on our system of providing customized insurance quotes based on a user’s price and/or coverage preferences (expiring in 2033 or after), two patents for our loyalty call routing system (expiring in 2033 or after), a patent for a multivariate predictive system that processes usage-based data (expiring in 2035 or after), four patents for the implementation of chatbots in online quoting and servicing (expiring in 2038 or after), two patents for our Commercial Lines business classification system (expiring in 2039 or after), three patents for

our automated document classification system (expiring 2040 or after), and one patent for embedded quoting (expiring in 2043 or after).

We have a substantial amount of “know-how” developed from years of experience with usage-based insurance, and from analyzing the data from billions of driving miles derived from our usage-based devices and our mobile app.

We believe this intellectual property provides us with a competitive advantage in the usage-based insurance market.

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Our insurance subsidiaries are generally subject to regulation and supervision by insurance departments of the jurisdictions in which they are domiciled or licensed to transact business.

At least one of our insurance subsidiaries is licensed and subject to regulation in each of the 50 states, the District of Columbia, Bermuda, Canada, and Puerto Rico.

At least one of our insurance subsidiaries is licensed and subject to regulation in each of the 50 states, the District of Columbia, Puerto Rico, Bermuda, and Canada.

We also have subsidiaries that write excess and surplus lines, which are regulated in a different fashion that generally offers additional product flexibility.

The nature and extent of such regulation and supervision varies from jurisdiction to jurisdiction.

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In addition, California and Florida treat certain of our subsidiaries as domestic insurers for certain purposes under their “commercial domicile” laws.

We also have subsidiaries that write excess and surplus lines;

these activities do not require a license but are regulated.

Insurance laws impose numerous requirements, conditions, and limitations on the operations of insurance companies.

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• capital and surplus requirements,

• restrictions on marketing,

• statutory accounting principles specific to insurance companies and the content of required financial and other reports,

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Insurance departments establish and monitor compliance with capital and surplus requirements.

Although the ratio of written premiums to surplus that the regulators will allow is a function of a number of factors (including applicable law, the type of business being written, the adequacy of the insurer’s reserves, and the quality of the insurer’s assets), the annual net premiums that an insurer may write historically have been perceived to be limited to a specified multiple of the insurer’s total surplus, generally 3 to 1 for property and casualty insurance, which is the target for our vehicle businesses;

Although the ratio of written premiums to surplus that the regulators will allow is a function of a number of factors (including applicable laws, the type of business being written, the adequacy of the insurer’s reserves, and the quality of the insurer’s assets), the annual net premiums that an insurer may write historically have been perceived to be limited to a specified multiple of the insurer’s total surplus, generally 3 to 1 for property and casualty insurance, which is generally the target for our vehicle businesses;

our Property business maintains a lower premiums-to-surplus ratio.

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The combined premiums-to-surplus ratio for all of our insurance companies was 2.8 to 1.

In addition, as of December 31, 2022, we had access to $4.4 billion of securities held in a non-insurance subsidiary, portions of which could be contributed to the capital of our insurance subsidiaries to support growth or for other purposes.

In addition, as of

December 31, 2023, we had access to $4.2 billion of securities held in a non-insurance subsidiary, portions of which could be contributed to the capital of our insurance subsidiaries to support growth or for other purposes.

The National Association of Insurance Commissioners (NAIC) also has developed a risk-based capital (RBC) program to enable regulators to identify and take appropriate and timely regulatory actions relating to insurers that show signs of weak or deteriorating financial condition.

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Laws and regulations that limit the cancellation or non-renewal of policies, or that subject program withdrawals to prior approval requirements, may delay or restrict an insurer’s ability to exit unprofitable markets or businesses.

See Item 1A, Risk Factors – III.

Operating Risks below for more information.

As mentioned above, insurance departments have regulatory authority over many other aspects of an insurer’s insurance operations, including coverages, forms, rating criteria, and rate levels.

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The Federal Insurance Office is required to collect information about the insurance industry and monitor the industry for systemic risk.

See Item 1A, Risk Factors below for more information.

Our investment portfolio, which had a fair value of $66.0 billion at December 31, 2023, compared to $53.5 billion at December 31, 2022, consists of fixed-maturity securities, short-term investments, and equity securities (nonredeemable preferred stocks and common equity securities).

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Investment income is affected by the variability of cash flows to or from the portfolio, shifts in the type and quality of investments in the portfolio, changes in yield, and other factors.

For securities related to our investment portfolios, total investment income includes interest and dividends, net realized gains (losses) on securities sold, and net holding period gains (losses) on securities (composed primarily of valuation changes on equity securities).

Total investment loss, before expenses and taxes, was $0.7 billion in 2022, compared to investment income of $2.4 billion in 2021, and $2.6 billion in 2020.

On a pretax total return basis (i.e., total investment income plus changes in net unrealized gains (losses) on our fixed-maturity securities), our investment portfolio generated an investment loss of $4.3 billion at December 31, 2022, compared to investment income of $1.2 billion and $3.3 billion for the years ended December 31, 2021 and 2020, respectively.

Outside of our investment portfolio, but reported in impairment losses in the consolidated statements of comprehensive income, were

$8.6 million and $5.0 million of other-than-temporary impairment losses resulting from renewable energy tax credit investments during 2022 and 2021, respectively;

no other-than-temporary impairment losses were recognized in 2020.

For securities related to our investment portfolios, total investment income includes interest, dividends, accretion, amortization, net realized gains (losses) on securities sold, and net holding period gains (losses) on securities (composed primarily of valuation changes on equity securities).

Total investment income, before expenses and taxes, was $2.3 billion in 2023, compared to an investment loss of $0.7 billion in 2022, and investment income of $2.4 billion in 2021.

On a pretax total return basis (i.e., total investment income plus changes in net unrealized gains (losses) on our fixed-maturity securities), our investment portfolio generated investment income of $3.8 billion in 2023, compared to an investment loss of $4.3 billion in 2022 and investment income of $1.2 billion in 2021.

Outside of our investment portfolio, but reported in impairment losses in the consolidated statements of comprehensive income, were $9.0 million, $8.6 million, and $5.0 million of other-than-temporary impairment losses resulting from tax credit investments during 2023, 2022, and 2021, respectively.

For more detailed discussion of our investment portfolio, see Note 2 – Investments, Note 3 – Fair Value, and Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Annual Report.

Service Businesses

Our service businesses, which represent less than 1% of our total revenues and do not have a material effect on our overall operations, primarily include our commission- or fee-based businesses, where we often act as an agent for other insurance companies.

We offer home, condominium, and renters insurance, among other products, written by unaffiliated insurance companies in the continental United States in the direct channel.

Our service businesses, which represented less than 1% of our total revenues at December 31, 2023, 2022, and 2021, and did not have a material effect on our overall operations, primarily include our commission- or fee-based businesses, where we often act as an agent for other insurance companies.

We offer home, condominium, and renters insurance, among other products, written by unaffiliated insurance companies in almost all states in the direct channel.

We also offer our customers the ability to package their commercial auto coverage with other commercial coverages that are written by unaffiliated insurance companies.

We receive commissions for the policies written under this program and allocate marketing and other administration costs associated with maintaining these programs.

Service revenues also included business related to the CAIP plans.

Prior to August 2022, we acted as a servicing carrier, on a nationwide basis, for the CAIP plans, which are state-supervised plans servicing the involuntary market in nearly all states.

As a service provider, we provided policy issuance and claims adjusting services and collected fee revenue.

Our CAIP service contract expired in August 2022 and we did not renew the contract.

The expiration of our participation as a CAIP service provider does not materially affect our financial condition, results of operations, or cash flows.

Prior to the expiration of our Commercial Automobile Insurance Procedures/Plans (CAIP) service contract in August 2022, we acted as a servicing carrier, on a nationwide basis, for the CAIP plans, which are state-supervised plans servicing the involuntary market in nearly all states.

The expiration of our participation as a CAIP service provider did not materially affect our financial condition, results of operations, or cash flows.

Liability for Property-Casualty Losses and Loss Adjustment Expenses

The consolidated financial statements include the estimated liability for unpaid losses and loss adjustment expenses (LAE), which include ALAE (e.g., defense and cost containment expenses) and unallocated LAE (e.g., adjusting and other expenses), of our insurance subsidiaries.

The consolidated financial statements include the estimated liability for unpaid losses and LAE, which include ALAE (e.g., defense and cost containment expenses) and unallocated LAE (e.g., adjusting and other expenses), of our insurance subsidiaries.

Our objective is to ensure that total reserves (i.e., case reserves and incurred but not recorded reserves, or IBNR) are adequate to cover all loss costs, while sustaining minimal variation from the time reserves are initially established until losses are fully developed.

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These anticipated trends are reconsidered periodically based on actual development and are modified if necessary.

See Note 6 – Loss and Loss Adjustment Expense Reserves in the Annual Report for a detailed discussion of our loss reserving practices and a reconciliation of our loss and LAE reserve activity, along with incurred and paid claims development by accident year for our segments, based on definitions pursuant to statutory accounting principles.

See Note 6 – Loss and Loss Adjustment Expense Reserves in our Annual Report for a detailed discussion of our loss reserving practices and a reconciliation of our loss and LAE reserve activity, along with incurred and paid claims development by accident year for our segments, based on definitions pursuant to statutory accounting principles.

Human Capital

We believe that our people and our culture remain our most significant competitive advantage, and that having the right people working together in the right way is critical to driving our results, building our enduring business, and creating long-term shareholder value.

Our culture is deeply rooted in our Core Values (Integrity, Golden Rule, Excellence, Objectives, and Profit) and is the foundation for our human capital management strategies to attract, retain, and motivate highly qualified employees.

We believe that our culture and continued success has enabled us to attract, engage, and retain highly talented people in diverse markets and from a broad range of backgrounds and experiences.

We believe that our culture and continued success has enabled us to create a workplace comprised of highly talented people across diverse markets and with a broad range of backgrounds and experiences.

Attract and Hire

We employ extensive recruiting practices towards the goal of developing qualified and deep candidate pools and attracting candidates from both established and new sources.

We employ extensive recruiting practices with the goal of developing qualified and deep candidate pools and attracting candidates from both established and new sources.

We believe that our recruitment efforts generally have enabled us to present diverse and high-potential pools of job candidates to our hiring managers.

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Employee retention is an important part of our strategy.

Our annualized employee retention rate for 2022 was 83%, down one point from the prior year, and, as of December 31, 2022, more than 15,000 employees had over 10 years of tenure at the company.

Our annualized employee retention rate for 2023 was 86%, up three points from the prior year, and, as of December 31, 2023, more than 16,000 employees had over 10 years of tenure at the company.

Promoting from within is also a key part of our strategy.

Many of our leaders, including most current executive team members, joined Progressive in a more junior position and advanced to significant leadership positions within the organization.

In 2022, we filled approximately 68% of our open positions above entry level by promoting from within, including just over 2,000 managerial positions.

Many of our leaders, including nearly all of the executive team members, joined Progressive in a more junior position and advanced to significant leadership positions within the organization.

In 2023, we filled over 70% of our open positions above entry level by promoting from within, including just over 2,200 managerial positions.

Demographic Data

We publish employee and manager demographic information on our DEI website and update this data on an annual basis.

We publish employee and manager demographic information on our diversity and inclusion website and update this data on an annual basis.

We also disclose our consolidated EEO-1 data online.

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• During 2023, we hired more than 14,600 new employees of whom 67% were women and 56% were people of color, representing about 1.7% of the total applicants for a job at Progressive.

• During 2022, our employees promoted into management positions were more gender and racially diverse than our management population during 2021.

Specifically, 55% of such promotions were women and 32% were people of color.

• During 2023, of our employees promoted into management positions, 55% were women and 32% were people of color.

As of December 31, 2023, women represented 49% of all managers and people of color were 26% of all managers.

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Two of our career development boot camps (IT Programmer and Analyst) are intended to accelerate career opportunities.

Moreover, our professional development program, “Own It,” encourages employees to take control of their career through team-building exercises, coaching techniques, and communication strategies.

Available to new and tenured employees, our learning solutions are tailored to both individual contributors and leaders and cover a broad swath of skills and competencies.

Moreover, our professional development program, “Career Central,” encourages employees to take control of their career through team-building exercises, coaching techniques, and communication strategies.

Available to new and tenured employees, our learning solutions are tailored to both individual contributors and leaders and cover a broad

swath of skills and competencies.

We also leverage our extensive contemporary art collection to offer training sessions to spark conversations about our culture, innovation, ethical obligations, and respecting our differences, among other things.

Our Core Values are the foundation for our Code of Business Conduct and Ethics, which provides clear expectations for all our people and confirms our commitment to high ethical standards and compliance with legal requirements.

We provide ethics training, as well as regular communications, video series, and outside speakers presenting themes such as Celebrate Disagreement and Courage at our Core, to emphasize our commitment to our ethical and legal responsibilities.

We provide ethics training, as well as regular communications, video series, and outside speakers presenting themes such as Celebrate Disagreement, Core Conversations, and Courage at our Core, to emphasize our commitment to our ethical and legal responsibilities.

Additionally, we have an “open door” policy that empowers every employee to reach out to any manager or any human resource representative when they have a question or concern or they want to share an idea.

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We believe that in order to be consumers’, agents’, and business owners’ number one destination for insurance and other financial needs, we need to anticipate and understand the needs of our customers.

We seek to be diverse in our employee demographics, experiences, and perspectives.

Our commitment to diversity starts at the top with our highly skilled and diverse

Board of Directors.

Therefore, we seek to be diverse in our employee demographics, experiences, and perspectives.

Our commitment to diversity starts at the top with our highly skilled and diverse Board of Directors.

We are one of the few public companies with a female CEO, as well as a female independent Board Chairperson.

Our DEI efforts are overseen by our Compensation Committee on behalf of the entire Board of Directors, and those efforts are implemented at all levels of the organization.

Our efforts focus on four primary objectives, which have been in place for several years:

For Progressive, DEI is not just a program, initiative, or singular goal.

We take a holistic approach to DEI guided by four primary objectives, which have been in place for several years:

(1) to maintain a fair and inclusive work environment;

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and (4) to contribute to our communities.

In line with this focus, in 2020 we introduced an ambitious goal to double the representation of people of color in senior leadership from 10% to 20% by the end of 2025.

During 2022, we increased this senior leadership representation from 16% to 17%.

A few years ago, for instance, we introduced an ambitious aspiration to double the representation of people of color in senior leadership from 10% to 20% by the end of 2025.

We set this aspiration to challenge ourselves to reach far and wide to attract diverse, highly qualified applicant pools when recruiting opportunities arose, to invest broadly in developing our internal talent, and to help measure the success of these efforts.

During 2023, representation of people of color in senior leadership increased from 17% to 18%.

We're committed to creating an environment where all our people feel welcomed, valued, and respected, and we integrate DEI into our workplace.

We support DEI awareness among our employees through formal training sessions and workshops focused on building our overall awareness and individual competencies to address difficult topics such as racial inequality, micro-inequities, and unconscious biases.

This includes hosting regular Inclusion Quarterly events, which feature a series of speakers, discussion groups, and storytelling focused on themes of diversity, equity, and inclusion.

We also have a companywide Courageous Conversations and DEI speakers bureau, where presenters and facilitators lead work teams in discussions around biases, stereotypes, and the development of inclusive behaviors.

Additionally, our executive team and managers have job objectives aimed at fostering a diverse and inclusive workplace.

For several years we have hosted an annual weeklong event focused on diversity and inclusion, where employees have the opportunity to attend webinars and panel discussions, take part in group activities, listen to podcasts featuring Progressive employees, and more.

Additionally, we have DEI leadership job objectives for our executive team and managers aimed at fostering a diverse and inclusive workplace.

Moreover, we support efforts to contribute to our communities, through our Keys to Progress ® programs (which include providing vehicles to veterans and furnishing homes for individuals emerging from homelessness), our various education and engagement efforts, and our financial contributions to various community organizations.

For over 20 years, we have also contributed to The Progressive Insurance Foundation, which provided matching funds to eligible 501(c)(3) charitable organizations to which employees contributed.

To more broadly represent our employees and their communities, in 2020, The Progressive Insurance Foundation began funding national charitable organizations identified by our Employee Resource Groups and, beginning mid-2022, in lieu of matching employee’s contributions, each employee can recommend an eligible charity to receive a fixed amount of the Foundation’s charitable giving without requiring the employee make an out-of-pocket donation.

Beginning mid-2022, in lieu of matching funds, each employee can recommend an eligible charity to receive a fixed amount of the Foundation’s charitable giving without requiring the employee make an out-of-pocket donation.

We know we still have much more work to do, but we are committed to these efforts.

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progressive.com/about/diversity-and-inclusion.

The information on that website is not incorporated by reference in, and does not form part of, this Annual Report on Form 10-K or any other SEC filing.

The information on that website is not incorporated by reference in, and does not form part of, this Form 10-K or any other SEC filing.

Employee Resource Groups

Over a decade ago, our first employee resource groups (ERGs) were created to help build communities for our employees with common backgrounds, life experiences, interests, and professional goals.

Over a decade ago, our first Employee Resource Groups (ERG) were created to help build communities for our employees with common backgrounds, life experiences, interests or professional goals.

We have nine employee resource groups (Progressive African American Network, Asian American Network, Disabilities Awareness Network, Progressive Latin American Networking Association, LGBTQ+ Network, Military Network, Network for Empowering Women, Parent Connection, and Young Professionals Network) that support creation of a space for networking, understanding differences, and sharing experiences.

In the time since their inception, our ERGs have grown in both influence and size with 44% of Progressive people belonging to at least one ERG as of December 31, 2023.

We have nine employee resource groups (Progressive African American Network, Asian American Network, Disabilities Awareness Network, Progressive Latin American Networking Association, LGBTQ+ Network, Military Network, Network of Empowering Women, Parent Connection, and Young Professionals Network) that support creation of a space for networking, understanding differences, and sharing experiences.

Compensation and Benefits

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and paid parental leave following birth, adoption, or placement of a foster child.

Our health and wellness offerings include on-site fitness centers, medical clinics, and healthy seminars.

Our health and wellness offerings include on-site fitness centers, medical clinics, and health seminars.

Many of these on-site offerings transitioned to online offerings, such as fitness classes and health discussions, to meet the needs of our employees who are working remotely.

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Our website is located at progressive.com.

Except as expressly noted herein, the information on this website does not incorporate by reference in, and does not form part of, this Form 10-K.

Except as expressly noted herein, the information on this website is not incorporated by reference in, and does not form part of, this Form 10-K.

As soon as reasonably practicable, we make all documents that we file with, or furnish to, the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to these reports, available free of charge via our website at progressive.com/investors.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business